Citigroup Audit Committee Faces a Vote

Tomorrow Citigroup holds its annual meeting, and with it a vote on the Audit & Risk Management Committee. The American Federation of State, County and Municipal Employees (AFSCME) Pension Plan is pushing for a no vote on the currently serving members of the committee, and they’re not alone. Financial analysis company, RiskMetrics, also recommends that shareholders vote no on re-electing many of the committee members.

Citigroup has accepted the lion’s share of the U.S. government bank bailout funds to date. High risk ‘toxic’ assets caused them to suffer extreme losses on the balance sheets and, ultimately, in shareholder value. Critics of the current Audit & Risk Management Committee claim they failed to protect shareholders from excessive exposure to credit, market, liquidity and operational risk.

“The accountability for risk management begins and ends with the committee, ” said AFSCME President Gerald W. McEntee.  These members have to go. The committee failed to properly assess and control risks and protect shareholders. They are responsible for the need for government intervention. Citi needs a fresh start.”

In addition to calling for the replacement of four of the fourteen board members, RiskMetrics who consults 70 of the biggest 100 investment managers, recommends that shareholders vote to require the company to:

• disclose information about their compensation consultant
• require senior executives to retain 75% of the shares acquired through compensation plans for two years after they leave the company

“Despite the fact that the board has many incumbent directors that have been successful in their respective fields and have been on the board for some time, their track record taken as a whole is dismal given that the company is currently surviving on federal assistance,” RiskMetrics said. “Although responsibility for this lies with the whole board, we do not believe that removing the whole board would be in the best interests of the shareholders at this critical juncture.”

Along with AFSCME and RiskMetrics,  Egan-Jones, Glass Lewis and Proxy Governance are also recommending that Citigroup Inc. shareholders vote against electing some current and former Audit & Risk Management committee members.

Image Credit: www.citigroup.com screenshot